Single-value combinatorial auctions and implementation in undominated strategies

Abstract

In this paper we are interested in general techniques for designing mechanisms that approximately maximize the social welfare in the presence of selfish rational behavior. We demonstrate our results in the setting of Combinatorial Auctions (CA). Our first main result is a general deterministic technique to decouple the algorithmic allocation problem from the strategic aspects, by a procedure that converts any algorithm to a dominant-strategy ascending mechanism. This technique works for any single value domain, in which each agent has the same value for each desired outcome, and this value is the only private information. In particular, for CAs, where each player desires any one of several different bundles but has the same value for each of them, our technique converts any approximation algorithm to a dominant strategy mechanism that almost preserves the original approximation ratio. Our second main result provides the first computationally efficient deterministic mechanism for the case of single-value multi-minded bidders (with private value and private desired bundles). The mechanism achieves an approximation to the social welfare which is close to the best possible in polynomial time (unless ZPP=NP). This mechanism is an implementation in undominated strategies, as well as an algorithmic implementation, notions that we justify and are of independent interest.